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A stepped-up basis can be higher than the before-death cost basis, which is the benefactor's purchase price for the asset, adjusted for improvements or losses. Because taxable capital-gain income is the selling price minus the basis, a high stepped-up basis can greatly reduce the beneficiary's taxable capital-gain income if the beneficiary ...
Whole life insurance: Premiums can be 10 to 15 times higher than term policies due to lifetime coverage and cash value growth. Universal life insurance: Offers flexibility in premium payments ...
Types of cash value life insurance. Choosing a cash value life insurance policy means deciding on coverage that is designed to last a lifetime while also allowing you to build savings within the ...
Assets acquired by inheritance: Assets acquired by inheritance are eligible to receive stepped-up basis, meaning the fair market value of the asset at the time of the decedent's death. See IRC § 1014. This provision shields the appreciation in value of the asset during the life of the decedent from any income taxation whatsoever.
A life insurance death benefit claim can sometimes be denied based on specific exclusions written into the policy. One common example is an aviation exclusion, which could prevent a payout if the ...
The determination of the cash value, both the base amount and the applicable surrender charge, in the contract can be explicit by determining the value for each surrender date (guaranteed cash values), by referring to the value of specific investments or subject to the discretion of the insurance company, which is often executed to bring cash values in line with values of the investments of ...
Permanent life insurance is life insurance that covers the remaining lifetime of the insured. A permanent insurance policy accumulates a cash value up to its date of maturation. The owner can access the money in the cash value by withdrawing money, borrowing the cash value, or surrendering the policy and receiving the surrender value.
Whole life insurance: This type offers fixed premiums, guaranteed cash value growth and coverage up to a maximum age — typically 95 to 121. Some whole life policies can also earn you dividends.